Special Presentation

FBI Intelligence Transformation Featuring

moderator:

Richard Falkenrath, former NYPD Deputy

Commissioner for Counterterrorism

remarks by:

Sean Joyce, Executive Assistant Director,

National Security Branch, FBI

General Michael Hayden, Former Director, CIA

Congressman Mike Rogers, (R-MI), Member, House Committee on Intelligence

9:30 am – 10:40 am

wednesday, october 6, 2010

Transcript provided by

DC Transcription –

MR.: It’s my pleasure to introduce the next panel. I’m going to introduce Falkenrath who will introduce the rest of the participants.

Rich Falkenrath has a long history in intelligence, law enforcement and homeland security. At President Bush’s Homeland Security Council he was policy director and head of a team that developed President Bush’s legislative proposal to create a Department of homeland Security. He later became deputy homeland security adviser and also went to the NYPD where he started as deputy commissioner for counterterrorism. Since leaving the NYPD, Rich is at CFR and the Chertoff Group.

And please welcome Rich Falkenrath, our moderator. Thanks. (Applause.)

MR. RICHARD FALKENRATH: Thank you very much, Michael. It’s a real honor to be here moderating this panel, this extremely distinguished panel on an extremely timely topic and that topic is FBI intelligence reform. And for that we have a first rate set of speakers who I will introduce in just a moment.

But let me just say a word on the timeliness of this panel. In my judgment, the last 18 months really – 2009, 2010 – have been by far the most dynamic year in terms of active terrorist plots inside U.S. borders since 9/11. You’ve heard about many of them. There’s a few others that you probably haven’t heard about and there’s few that are sort of small.

But the big ones, the significant plotting in the Somali community related to the conflict in Somalia and possibly here in the U.S. We had the active casing of Mumbai for the purpose of preparing for the terrorist attack against that city by Lashkar-e-Taiba, by a U.S. citizen. We had an attempted plot to detonated improvised explosives, suicide vests in New York City subway led by an individual named Najibullah Zazi that was successfully disrupted in September of 2009; the Faisal Shahzad plot in Times Square, the Abdulmutallab plot attempt to blow up the airliner on Christmas; the Fort Hood shooting and others. It was a very dynamic time.

I had the privilege of serving in the White House from 2001 to 2004, and while we were on edge all the time, I would say we did not have this magnitude of actual specific known operational plots against the country that we’ve seen in the last 18 months.

It’s a deep question why that’s happening but this is not scholastic panel. This is an operational panel. We’re going to talk about some of the things that are going on to deal with that.

One of the things that’s happened in the last four years I think is that the institutional, organizational structure for domestic counterterrorism has settled down and much of the work now is on the inside with changes in laws, with attorney general guidelines, executive orders, rules, new legislative proposals, that manner of things.

So we’re seeing fewer and fewer organizational changes but more work occurring behind the walls of the organizations that matter the most here. And of those, unquestionably the foremost is the FBI which is the lead counterterrorism agency for inside the United States. That’s the subject of this panel. We have three excellent speakers on this.

The first – I’m going to introduce them all then start their remarks – is Sean Joyce. Sean is currently the executive assistant director of the FBI for the National Security Branch. In that capacity, he oversees counterterrorism, both domestic and international, foreign counterintelligence and intelligence activities inside the FBI. He will speak first.

Following him is Congressman Mike Rogers who’s a member of the HPSC/I and is also a former FBI special agent, relatively unusual to have – not too many special agents I think are currently serving in Congress. It gives him a unique insight into this problem.

And our final speaker is General Mike Hayden who served in many different capacities but his last few jobs in government were as director of CIA and director of NSA following a long, very distinguished career in the United States Air Force.

So with that, I’m going to turn it over. They’re going to make introductory remarks, then I will moderate the conversation between them and with you. First up, Sean.

MR. SEAN JOYCE: Thanks, Rich. Good morning everybody. And I appreciate the opportunity to discuss the transformation of the FBI since 9/11. I am honored to be here with my distinguished panelists.

Today I want to focus on the strides we have made since 9/11 to become a threat-based, intelligence-driven organization. We have not only changed business processes within the FBI but we’ve also changed the mindsets of the FBI workforce. While the change has been unprecedented, we still have work to do.

As the NSPG report noticed several weeks ago, the terrorism threat has diversified and continues to evolve from large scale, complex, centrally planned attacks to include smaller scale, dispersed and hard to detect attacks.

Two examples of these is Najibullah Zazi who traveled from Denver to New York City in an attempt to bomb the New York City subway system. Additionally, Faisal Shahzad placed a car bomb in the middle of Times Square. Both of these individuals were directed by core al Qaeda or their affiliates. However, both independently selected their targets.

Not only are the potential targets increasing but also our adversaries are changing in coming from different directions. We too have changed and continue to change to address this evolving threat.

The FBI has changed enormously in my 23 plus years as an FBI agent. I would not recognize the agency that I first entered into on June 29th, 1987. Immediately after 9/11, we shifted resources to address the threat. We built the critical infrastructure to establish an intelligence program. We created an organization with a national security focus and aligned the organization with these new priorities.

We stood up the Directorate of Intelligence. We began by expanding our intelligence workforce. We nearly tripled the amount of analysts within the FBI to 2,800. We doubled the number of linguists to nearly 1,500. We created a formal mechanism to disseminate intelligence reports. And since 9/11, we have disseminated over 90,000 intelligence reports. We created the Field Intelligence Groups in every FBI field office. We increased the number of joint terrorism task forces from 35 to 104.

The transformation continued and in 2005, the National Security Branch was formed. The National Security Branch combined the resources and capabilities of the Directorate of Intelligence, the Counterterrorism Division, the Counterintelligence Division and later the Weapons of Mass Destruction Director and the Terrorist Screening Center and the High-Value Interrogation Group.

My position was designed as the primary liaison and interlocutor with the director of National Intelligence. The formation of the NSB broke down stovepipes across the national security programs.

We continued and standardized the Field Intelligence Groups. The Field Intelligence Groups now collect, use and produce intelligence in much the same way so that they can share with one another and also share with our partners.

We’ve also worked to change the mindsets of the FBI workforce. We’ve stressed the importance of knowing your domain or territory and understanding that domain. Before 9/11 we collected evidence to prosecute cases. Today we collect intelligence to better understand the threat.

Our mission is not only to just disrupt the plots – it’s to collect against the plots, to understand the plots and ultimately to dismantle the network. We continue to look for the unknown. We make use of the information we already have and we have linguists, analysts, agents and operational specialists sitting together looking for the unknown, attempting to make connections from disparate pieces of information to connect the dots. We train them how to look for the unknown and mitigate the threat.

We’ve redesigned our human source program and the way we train agents to collect human intelligence. We recruit and identify sources, not for cases but to address the threats.

We’ve strengthened our partnerships. Now we share information and that is the rule. We withhold by exception. We’ve strengthened our efforts to reach out to community-based groups to help prevent radicalization.

We’ve built extensive outreach programs with the Muslim, Sikh and South Asian communities to develop trust, address their concerns and discuss items of mutual interest.

We’ve established a specialized Community Outreach Team to establish new contacts in key communities. An example of this is, as we all know, in 2007 and 2008, several individuals from Minneapolis traveled to Somalia to fight on behalf of al Shabaab. We met with the Somali American community in Minneapolis so we could better understand what was happening and discuss their concerns and prevent it from continuing to happen and to prevent it from happening in other communities across the nation.

Since 9/11, change has been a constant in the FBI. The threat continues to change but the intensity and focus of the FBI workforce does not. We continue to refine our intelligence program to confront the ever changing threat in order to protect the American people each and every day. Thank you.

MR. FALKENRATH: Thank you very much, Sean. We’re going to turn now to Congressman Rogers.

REP. MIKE ROGERS (R-MI): Well, thank you very much. And thanks to the governor and the congressman for the work you’ve done on the 9/11 Commission. It would have been very easy for you to move on and do other things. Thanks for dedicating so much time and effort to do an invaluable task to the national security of the country.

I have to tell you when I first got invited to this, I was a little bit nervous in the sense that they said, you’re going to serve on the panel. It will be the FBI, the CIA and a member of Congress. And I said, you know, I think I’ve heard that joke. (Laughter.) And I think that turns out well for me on this. But I do appreciate the opportunity to be here.

And thanks to our distinguished panelists. I had the great opportunity to watch Mike Hayden when he assumed the role of DCI. And I don’t think he has a bigger fan from what was a skeptical member of Congress and he can certainly share that over a cup of coffee I bet. But we have – I have really come to admire the work that he had done there. It was unbelievable. Sean, I wish you well in your new endeavor.

I want to talk about these cultural changes. As an agent, when I was in, it was about guns and handcuffs and cooperating witnesses. That’s how you judge your worth as an FBI agent. And if you didn’t fit into that matrix, you probably weren’t one of the better agents in that particular office. So this notion of a counterterrorism squad or a terrorism squad back then wasn’t really something that you really wanted to aspire to.

When I think about this organization, it’s by far the largest, some 35,000 people in the FBI. It’s certainly the most public of our intelligence units. And of course, they have certainly a large criminal aspect to that.

So they have both the good fortune and the misfortune of being the most watched, probably the most criticized in their ability to try to change from this guns, handcuffs, cooperative witnesses to Intel reports and analysis and confidential sources or assets that may never testify. That is a cultural change for the bureau.

And they’ve done some amazing things. The agents on the ground floor who are doing their work out in the field have made that transition given the large number of the new agents less than five years of service have been able to make that transition. It doesn’t come without difficulties.

And if you think about what Congress did as we said, all right, 9/11. Everybody has to change. There was the discussion of MI-5 versus MI-6. Should we do the same with the bureau? They went through all of those suggestions along the way.

So Congress, in our wisdom, we came up with just a few pages of suggestions for the community to live up. We’ve added more committees for them to have oversight over so they can spend a lot of time doing that and then we threw money at the CT problem including the FBI.

And I say that, I just want to read a couple of lists here from 9/11 to today. We have – and why this is important for the FBI’s transition. At the CIA, the Counterterrorism Center, the CIA DI Office of Terrorism Analysis, the National Counterterrorism Center. At DIA, the Joint Intelligence Task Force for Counterterrorism, the FBI Joint Terrorism Task Forces, the 72 fusion centers to integrate CT information around the country. At the NSB, the National Security Branch, Counterterrorism Division is now there. At DHS they have the Homeland Counterterrorism Division. At State Department now they have the INR Office of Terrorism, Narcotics and Crime. At Treasury, the Office of Intelligence and Analysis in Terrorist Financing.

The Department of Defense had a Criminal Investigative Service whose job it was to investigate fraud against the government in contracting – also now has a counterterrorism mission. And the reason they did that is because that’s where the money was.

Just on counter proliferation – the National Intelligence Council has an NIO for weapons of mass destruction and proliferation. The CIA has now a DI WINPAC on counter proliferation. The NCS, Counterproliferation Division. The National Counterproliferation Center at DHS, the Domestic Nuclear Detection Office. At the FBI, NSB, Weapons of Mass Destruction Directorate. At DOE, the Nuclear Materials Division. At State Department – it goes on and on.

Then we decided Afghanistan and Pakistan, the Durand Line was pretty important. We’d better pay attention to it. So what happens? The ODNI national intelligence manager of Afghanistan and Pakistan. They also have mission managers assigned. The CIA DI Office of South Asia Analysis to focus on Afghanistan and Pakistan, they also have mission managers assigned. The CIA, the NSC, the Near East Division, they have analysts and directorate assigned to Afghan/Pakistan. The National Intelligence Council now created the NIO for Near East to focus on Afghanistan and Pakistan. The State Department, the DIA, Afghan/Pakistan Task Force. And at the FBI and the NSB, NDI – DI, the Afghan/Pakistan Analysis Office. So they created FIGs and fusion centers. And High-Value Interrogation Group is the new rendition of how we do this. Lots of money and lots of confusion.

Now, if you pick up the book and say, did they do everything that was in this book that represents the laws that were passed by Congress, the answer is yes. Have they gotten to where they need to go? The answer is absolutely not. They’ve had their problems. The NSL, letter problem was a cultural problem that they ran into along the way.

They have – there’s something called the virtual case file. The FBI in order to get into the intelligence business needed to get into the modern technology of using an information technology system that addressed their issues and allowed people to talk to each other. That has been a disaster. Hundreds of millions of dollars from 2003 to today, they still don’t have a functioning system. Actually, they just brought it back in House to try to come up I think with about their third rendition of this.

And here’s the problem with that. So they’re making – they’re fighting this transition. I think they’re doing an exceptional job on the ground level. Policy confusion abounds, people throwing money at them, creating divisions. They hire 2,800 analysts. And by the way, when you talk to those analysts, some are used appropriately. The majority have yet to be integrated into the system of true analysts when you talk about having an agent and an analysts who are on equal par looking to seek to determine a piece of actionable intelligence. Not even close to being there. Numbers are good. Actions, not so good.

And here’s the other problem the FBI has and I think why it’s been so difficult for them to kind of get over this hump. And it started about two years ago.

There is a real cultural problem here in Washington, D.C. Warfare or lawfare? And this is a decision that we’re going to have to make and we’re going to have to make as policymakers.

We tell the FBI we want you to change. We want you to go into the intelligence business. We also tell them, gee, by the way, we want you to read Miranda rights. We want you to collect evidence and we want you to put them in jail and we want to have press conferences.

It has been a schizophrenic message at best. And if you’re that agent who meets the airplane in Detroit, Michigan, and you believe your mission is to get information to prevent further damage or find out if there’s any other bad guys or what else is going on in the country and you’re told by Washington, D.C., that you need to Mirandize somebody, you can imagine how confusion that is.